October 27, 2007

BOOST IT TO $2K AND ADD A MEANS TEST AT CASH-IN AND PASS IT THIS CONGRESS:

Edwards Offers Savings Plan (CHRISTINE HAUSER, 10/27/07, NY Times)

Former Senator John Edwards proposed yesterday that rules governing retirement savings be revised by creating new 401(k)-type accounts that employees could carry from job to job, and that the government match workers’ contributions to the accounts, dollar for dollar, up to $500 a year.

Under his plan, workers would also have the option upon retirement to convert their savings to annuities that are sponsored by the government and administered at low fee.

Mr. Edwards has outlined some of these provisions before, including his proposal for the $500 government match, through tax credits, to what he calls Get Ahead Accounts. The match would be intended to benefit middle-class employees, though the Edwards campaign has not specified an income cap.


Were the GOP smarter they'd bring these proposals before Congress and make Democrats vote on them.

Posted by Orrin Judd at October 27, 2007 9:40 AM
Comments

So if I understand you correctly, I would have the option to put $2k per year into a fund and the government would match it. I'll conservatively assume that it earns 5% per year and the plan never increases the deposit limit. After personally contributing $60k over 30 years (plus another $60k from the state) if I decide to retire the account would have $273k. If during that same 30 years I managed to put away another $1million then I would be means tested and lose the $273k? Or would I just lose the half earned on the matching funds? Either way I'm not a fan.

Posted by: Patrick H at October 27, 2007 11:40 AM

I wonder where our beloved govt. get the money from to match the savings of our downtrodden middle class.

Come to think of it, if the middle class are so poor and helpless without govt. handouts, are they middle class? What should the lower class do?

Patrick H: You are taken care by the govt. anyway, what do you need that extra million for? Whom did you exploit to make that million? Of course, you should be taxed out of whatever over and above the govt. authorized you to have.

Soon the capitalist communist Chinese would remind us: make money is glorious.

Posted by: ic at October 27, 2007 1:20 PM

401k portability would be an easy reform, since we already allow rollover to IRAs.

However, the means-test probably needs to come at contribution time, not cash in time, not unlike payroll taxes that kick in at different levels on weekly paychecks.

Posted by: kevin whited at October 27, 2007 2:15 PM

Currently, 401k is rollover-able to your IRA. How more portable do you want?

"the means-test probably needs to come at contribution time"

So Bill Gates gets a govt. subsidy when he starts out, and nobody can take it away after he makes billions.

The govt. has done more than enough to destroy personal responsibilities. If the retiree needs assitance at the time he retires, lets help him. Americans are not heartless. But lets not "help" when he still can make money for himself.

"the government match workers’ contributions to the accounts, dollar for dollar, up to $500 a year" This is purely discrimination against the working poor. If a person can't afford to put money in his 401k, he will not get the matching $500. If a person is unemplyed, he cannot get his $500. How about a govt. created 401k with a $500 funding for each person each year? Still, where does the govt. get his money from?

Posted by: ic at October 27, 2007 2:33 PM

I do like the O'Neil plan that OJ has posted where each year until age "x" every child gets an amount contributed to a fund that is theirs when they retire with Social Security being means tested. The other plan - no way.

Posted by: Patrick H at October 27, 2007 3:02 PM

Who is contributing to the child's retirement fund? Its parents, or the suckers called American taxpayers?

How about a choice: a worker either contributes to FICA and Medicare as he is doing right now, or contributes the 7.5% of his income and his employer's matching fund to his 401k, and the employee is not eligible for any more social security benefits when he retires?

Posted by: ic at October 27, 2007 3:52 PM

IC,
I'm all for that plan, but it's not realistic. SS is pay as you go and if everyone opts out, everyone who's been paying in for decades gets nothing. Instead of the state having to pay each one of these people a thousand per month, wouldn't it be better to pay children $200 a month, means test SS immediately and end SS in the next 30 years? Your idea is great but impossible to get passed.

Posted by: Patrick H at October 27, 2007 5:26 PM

Patrick: Why should the state have to pay? Where does the state's money come from? Do you mean today's working stiffs have to pay for somebody's grandparents' retirement, and pay to raise somebody else's children? Why can't the parents raise their own children?

Posted by: ic at October 27, 2007 6:54 PM

The beauty is if the taxpayer puts it in for kids and then you means test it when they retire they get no more taxpayer money.

Posted by: oj at October 27, 2007 7:09 PM

No, the means test comes at payout, not payin.

Posted by: oj at October 27, 2007 7:10 PM

Borrow it.

Posted by: oj at October 27, 2007 7:11 PM

5% isn't just conservative.

Posted by: oj at October 27, 2007 7:13 PM

ic,
The state doesn't "have to" pay anything. But in the real world with public opinion being what it is, what is the workable alternative? Self funded private accounts for all workers with no SS is the goal is it not? The public will not vote to end SS without some other form of universal pension plan. If both of these statements are true, how do we get there from here?

Posted by: Patrick H at October 27, 2007 7:17 PM

Pay each child $200 per month. Expect the child to work when he grows up, thus return the payment in the form of taxes to fund the next child.

What happens to a child who never works, who is a talentless artist waiting for the big break, who finds more fulfilment surfing in Hawaii, and skiing in the Alps?

Then everybody is required to work.

But no profit making concern can afford to hire the talenless artist who likes to wave surfing and skiing.

Then the state must create a job for him.

But he simply doen't like to be exploited by the management, and refuses to work.

Then the state must make him work, must assign a job to him.

He loves women and loves kids, so he makes 9 kids with 9 different women. Each kid is paid $200 per month by the state.

Then the state must stop him from making kids. Each person is allowed to have only one kid per life time. That shall be called one-child policy.

Everybody has a job, every child is raised by the state, and taken care of when he retires.

Voila! we have paradise on earth.

We have replicated a Maoist China.

Posted by: ic at October 27, 2007 8:04 PM

How do these talentless artists waiting for the big break, who find more fulfillment surfing in Hawaii, and skiing in the Alps fund that lifestyle without working? If you only contribute to their accounts until they are 10 or 12 years old and they're not allowed to retire until 65 they'll have to work to get there and they'll strive to achieve just as they do know. Not simply because they want a comfortable retirement, but to have a better life now. If I didn't have to worry about retirement I'd be working just as hard but spending more money instead of putting away $15k a year.

Posted by: Patrick H at October 27, 2007 11:24 PM

We all know that one gets more of anything that is subsidized and one gets less than anything that is taxed. I therefore think we need a constitutional amendment to prohibit means testing any federal government payment. If the gov is going to provide food to some, it needs to provide it to all. If it wants to provide money to some, it needs to provide money to all. When congress considers a new government handout, the cost calculation is easy - the cost per person multiplied by the US population. No sneaking in 'cheap' plans and then slowly add more and more people to by changing the requirements. And no more punishing people that work and save for retirement and rewarding people who squander their money and expect the government (i.e everyone else) to help them out. All that does is encourage more people to squander their money. If some are concerned about the 'poor', let them donate their money to charities to help them but don't let them reach into my pocket to provide charity to others.

Posted by: bbb at October 27, 2007 11:36 PM

"they're not allowed to retire until 65 they'll have to work to get there and they'll strive to achieve just as they do now"

Keywords: "not allowed", "have to work"

In my post:
"Then everybody is required to work...
Then the state must create a job for him...
Then the state must make him work, must assign a job to him."

That was exactly what the Chinese govt. did to their people in the last century.

"If I didn't have to worry about retirement I'd be working just as hard but spending more money instead of putting away $15k a year."

So you work hard and spend all your money, who should pay for your retirement? Someone, not you, not me, but the guy behind the tree, must pay. By the way, that poor guy has to pay for everybody else's retirement, and raises everbody else's kids, because everbody else wants to spend and enjoy their hard earned money while they can.

Just make sure you are not the guy behind the tree.

Posted by: ic at October 28, 2007 2:25 AM

ic:

Don't confuse the state forcing someone to do something with the state forcing someone to do something in order to qualify for a benefit.

Posted by: oj at October 28, 2007 9:01 AM

All, except libertarians, are concerned about the poor. That's why no one minds taxes much.

Posted by: oj at October 28, 2007 9:05 AM
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